The goal of any property investor is to make money, whether short or long term. Especially for first-time property investors, it is important to learn as much as possible so this goal can be accomplished. Whether investing in commercial or residential real estate, there are definite wrong and right ways to get things done.
Following are a few helpful tips for first-time property investors.
- Right Property/Right Price – Because real estate investment is about capital growth, it is imperative that you choose the right property at the right price, which increases the chance for better value. For this, you want to conduct in-depth research on not just the property but also the market and entire geographical area to get a more realistic view of property worth.
- Cash Flow – When investing in property, there is always the risk of major financial challenges. For instance, if buying a distressed property to flip, high-dollar expenses may be uncovered during the demolition process. If investing property to rent long-term, there could be periods of vacancy. To avoid financial stress, you need available cash flow for repairs, upgrades, insurance, taxes, and to cover mortgage or rent payments.
- Mortgage Type – For first-time property investors, it is critical to work with a reputable lender, one that can offer different types of mortgages but also the best terms and rates. This will ensure you receive trusted financial advice about things like tax-deductible interest on an investment property loan.
- Repairs and Upgrades – A common mistake made by first-time property investors is going too far with repairs and upgrades. There is nothing wrong in taking pride in the work done, but there is also a budget to consider and not all changes may be warranted. By performing an analysis of the property and the area, you will be able to focus in on specific repairs and upgrades deemed the most important.